Tax system's overhaul is looking less likely

Updated 10:52 pm, Sunday, September 23, 2012

AUSTIN — It's a pretty comfortable thing for most Republican leaders to talk about spending cuts, but it's something else entirely to talk about revamping a tax system that even some of their GOP brethren say needs reform.

It's easy to see why. People are used to the taxes they pay. Eliminate a break, and suddenly some are paying a tax that they didn't before. It's cold comfort to them if you also lower the tax rate or other levies so the state doesn't take in more money overall.

Little wonder that it takes a lawsuit, or several, to force change. And that's exactly what the state is again facing over its business tax and — in a long-running series — its school finance system.

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For Rep. Mike Villarreal, a San Antonio Democrat who serves on the House Ways and Means and Appropriations committees, it amounts to financial mismanagement by GOP Gov. Rick Perry and the Republican-dominated Legislature.

“Frankly, when you have a governor who says he will veto anything that even looks like a tax bill — even if it's a reform of an existing, broken tax — it gives little reason for legislators to devote resources to proposing tax legislation,” Villarreal added.

Not that Villarreal and others haven't tried.

Former Senate Finance Committee Chairman Steve Ogden, a Bryan Republican who is retiring from the Legislature, last year sought a revamp of the chronically underperforming business tax, warning that local school property taxes would otherwise rise. The business tax was expanded in 2006 to help pay for lower local school property tax rates, but it has fallen short of projections. Ogden also has called the state's exemption-riddled sales tax system a “rickety” thing.

But tax bills must originate in the House, and suggestions that it would take a hard look at exemptions before the 2013 legislative session seem to have faded along with any major move to overhaul the business tax absent a court order — especially since the incoming Legislature could be even more conservative than last year's already-conservative body.

Villarreal points to one break that was eliminated last year: $10 million that Texas gave annually to companies that got city and county property tax abatements but not school district tax breaks after rules on those school breaks changed. Villarreal and Sen. Rodney Ellis, D-Houston, pushed to eliminate the $10 million break, which some argued made sense only as a transitional program for companies that could rightfully expect school tax abatements when planning their projects.

Villarreal has pushed to create a special commission to recommend exemptions ripe for elimination. It's an uphill battle, he said, since tax code reform is “the right thing to do in the long term” but presents little short-term political gain.

“We do not scrub our tax code the way we scrub our budget. Every legislative session we open up the budget. We go line by line down the expenses that we approved in the entire session asking ourselves, ‘Is this working?'” he said. “In the tax code you can put an exemption in place and have it never be seen again.”

Perry says he's fine with lawmakers talking about a business-tax tweak. But he's touting a budget compact that focuses on reining in spending and eliminating duplication and budget tricks. Its section on taxes opposes new or higher ones — and supports making permanent a small-business tax break.

Austin as fruit

As he talked about taxes at the Texas Tribune Festival, Perry had a new description for the more-liberal-than-the-rest-of-Texas state capital, which some like to call “The People's Republic of Travis.” Perry said the Legislature's conservative vein on issues including taxes reflects the state — while allowing, “It may not reflect the blueberry in the tomato soup that we call Austin.”

Justice, lawyer, what's next?

One of the Supreme Court justices who heard arguments on the business-tax lawsuit last week announced the very next day that he is stepping down from the court to go work for Bracewell & Giuliani LLP's Austin office. Justice Dale Wainwright said in a cheerful statement, “I greatly enjoyed private practice, and it is time to return to it.” Some speculate his return to private life is temporary, and that he's eyeing a run for state attorney general if incumbent AG Greg Abbott doesn't seek re-election. Wainwright didn't return a telephone call for comment on his plans.

A debate, and ice cream

The nationally watched, hot-and-heavy congressional race between Republican U.S. Rep. Francisco “Quico” Canseco of San Antonio and his Democratic challenger, state Rep. Pete Gallego of Alpine, will mark a milestone with a Spanish-language debate Tuesday. The public is invited to the event hosted by AARP Texas and KWEX Univision 41 at Palo Alto College Performing Arts Center, 1400 W. Villaret in San Antonio. Doors open at 5 p.m., and the debate begins at 6 pm. There will be simultaneous translation for those who want it, free parking and, afterward, door prizes and ice cream. The debate won't be televised live, but Univision will broadcast an edited version Saturday in various markets in the district, which stretches from San Antonio's South Side to southeast of El Paso.